CONTRATO TITULARES MINERALES GRUPO TRABAJO DE MODALIDAD L5382005 2001-05-08 COOPERAT

Intel is one of the largest business organisations engaged in the information and communication technology (ICT) sector. It is widely known as a non-union employer, but also for having a sophisticated employee ‘voice’ system that seeks to foster meaningful communication between managers and employees and provides employees with the opportunity to make complaints. A well-organised dispute resolution system, called ‘The Open Door Process’, is attached to this voice system. The open door process permits employees to raise any work-related concern first with their immediate manager and then with subsequent levels of management until they get a resolution. Company policy is to address employee grievances in a prompt and fair manner. The process is operated by an employee relations team consisting of the site employee relations adviser and four employee relations specialists. The employee relations team is separate from the human resource department in an effort to signal its independence. To reinforce its autonomy from local personnel matters, the site employee relations adviser reports to a senior manager at corporate

headquarters in the USA and not to the director of human resources in the Irish operation.

The function of the employee relations team is to provide confidential coaching, advice, counsel and support to employees on any work related concern. The activities of the employee relations team are divided between four separate levels. At Level 1, employee relations specialists help employees resolve problems that they may have regarding employment benefits or working conditions, for example enquiries about pensions, maternity leave and so on. At this preliminary level, the emphasis is on assisting employees and supervisors resolve problems that have been raised. If complaints or grievances cannot be resolved at Level 1, the matter then progresses more or less automatically to Level 2, which is when the open door scheme comes into play proper. Level 2 sees the department or shift manager becoming directly involved in the search for a resolution to the problem. At this stage, the employee relations specialist actively helps the employee design and present their case/complaint. If the decision reached by the manager is not to the satisfaction of the employee, then s/he can take the matter further and evoke Level 3 of the dispute resolution machinery.

The decision to progress from one level to another is taken solely by the employee. The role of the employee relations specialist is that of advocate or adviser, not decision taker. At Level 3, the factory manager and the site employment relations adviser attempt to find a resolution to the problem. More formal and in-depth arrangements are normally used at this stage to find an acceptable settlement. Those involved in the dispute may be required to make a written statement and present their case in front of a panel consisting of the factory manager and the site employee relations adviser. These two people do not operate in the first instance as arbitrators, but in effect as company-level settlement managers: they actively explore various alternative paths to resolve the dispute. If none of these alternatives prove fruitful only then do they don an arbitrator’s hat and make a proposal on how to resolve the dispute. If the employee finds this proposal/ decision unacceptable the case can then progress to Level 4. At this point, the site manager becomes involved. Again, the expectation is that the site manager will seek to craft a solution that is acceptable to all parties.

The evidence suggests that the vast majority of concerns/ complaints are satisfactorily dealt with at Level 1. About half of all

matters that arise relate to employees seeking advice on things such as accessing maternity benefits, finding out about the possibilities of moving from full to part-time work or taking early retirement. Virtually all these matters are handled to the satisfaction of the employee. The remaining cases that arise at Level 1 generally relate to tensions or problems in the relationship between an employee and supervisor. Nearly all these complaints are settled to the satisfaction of the employee. The majority of cases that reach Level 2 relate to the rigorous performance management system operated by the company. Usually these cases involve an employee who is unhappy with the assessment appraisal score they have received from a supervisor. This appraisal system generates a relatively high number of complaints, as annual pay increments are conditional on employees obtaining a good assessment score. Other employee grievances handled at Level 2 cover a broad range of matters from harassment and bullying to the poor implementation of employment conditions. Most cases that enter Level 2 are satisfactorily resolved, usually within a 4-week time frame. With regard to cases relating to the performance management procedures, the available data suggest that in both 2000 and 2001 the majority of cases were resolved by changing in some manner the initial assessment/appraisal. In most of the cases in which no changes were made the employees pursued the matter to Level 3. At Level 3 most outstanding cases are brought to a closure. In 2002, only one case from an initial total of 715 raised at Level 1 required the direct attention of the site manager of Intel Ireland at Level 4.

4.5.1 Key characteristics of the Intel dispute resolution system

There are a number of notable features to this dispute resolution system. The first is that beyond Level 1 most of the registered concerns and grievances relate to the operation and outcomes of the organisation’s performance appraisal system. This suggests that an inevitable consequence of having a relatively demanding appraisal system, which is directly connected to the payment system, is a large number of complaints. This matter raises an interesting efficiency question about whether the design of an appraisal system may actually generate more costs than benefits. Addressing such questions, however, is beyond the scope of this paper. A second point is that given the number of complaints made every year it would appear that employees are readily prepared to use the

procedure: there appears to be few access problems whether of a formal or informal nature. Thirdly, the Open Door Process appears to be organised along the principles of deliberative problem solving rather than more traditional ‘splitting the difference’ adjudication procedures. Not only are factual evidence and records used whenever possible, but the working premise is that everybody should behave reasonably so that an acceptable settlement can be found. Fourthly, the scheme appears to operate in a relatively independent manner as evidenced by the large number of changes made to initial management decisions. The independence of the employee relations team from the human resource management department appears to be an important variable influencing this outcome. The legitimacy of the dispute resolution mechanism may be damaged if employees regarded it as a part of the human resource management department.

It is interesting to note that the Employee Relations Team itself is subject to Intel’s fairly rigorous continuous improvement programme. Every year the team has to identify a number of matters – the internal language used is ‘focal points’ – on which it will seek to make improvements. In 2002, for example, these ‘focal points’ concentrated on two matters. One was the marketing and delivery of employee relations services and secondly, to promote diversity training to avoid tensions emerging between Irish and non-Irish employees. The emphasis of these activities is to increase the dispute avoidance (as opposed to the dispute resolution) work of the team. The annual assessment of the employee relations team is made by senior management at the company’s headquarters in the USA. This involves evaluating whether the team has reached the targets it has set for itself and comparing the performance of the team against that of similar teams in other subsidiaries. Thus the employment relations team is in the frontline of the internal competition between different subsidiaries to win favour with headquarters. This strategic position ensures that the senior management in Intel Ireland gives active and on-going support to the employee relations service.

4.5.2 What can be learnt from Intel?

Clearly the Intel dispute resolution procedure strongly reflects an ‘American’ style enterprise-level HRM system. The main features of this system are efforts to establish direct connections between

people management and continuous organisational improvement, linking the management of the employment relationship to strategic decision-making inside the organisation, and promoting new human resource management policies that diffuse innovative consultation and communication structures as well as novel practices on matters such as dispute resolution. The ‘open door’ procedure that operates inside Intel is of a piece with this type of system. For the most part, it succeeds in fulfilling its designated aim of providing individual employees with accessible and fair procedures to challenge managerial decisions and to obtain a satisfactory resolution to grievances. The employment relations unit that operates the scheme mainly uses collaborative problem-solving practices to settle disputes. Although the analogy should not be pushed too far, there are elements of Intel’s system that touch upon Jacoby’s (1997) argument that many large firms, particularly in knowledge industries, are developing ‘modern manors’, involving the development of paternalistic HRM policies inside the organisation to provide employees with an internal safety net.

Clearly, the system is non-union: little scope exists to settle employment disputes on a collective basis. On this basis alone, many would argue that the Intel system should be strongly opposed. Yet, this paper sees this as an excessively negative verdict. Intel is not a bleak house where employees are governed mostly by ‘hard’ HRM policies and have to deal with a series of petty tyrannies characteristic of the sweatshop. Moreover, it does appear to have created and maintained a dispute resolution system that provides employees with procedural and substantive worksite justice. In other words, the fact that trade unions are absent from an organisation does not mean that a sense of fair play and equitable treatment is not present.

It could even be argued that the Intel experience holds lessons for trade unions and public agencies tasked with the responsibility of settling disputes. Chapter 2 noted that important changes are taking place to the world of work that are either generating new types of grievances or making certain practices or behaviour once tolerated no longer acceptable, for example workplace stress, bullying, sexual harassment. On the whole, grievances and disputes related to these matters are highly personal, which employees seek to settle on an individual basis. Collective dispute resolution mechanisms may not be the appropriate way to deal with such

cases. As the Intel dispute resolution instruments are geared almost exclusively to the settling of individual grievances its experience could hold lessons for the unionised firm or for public agencies seeking to find novel ways to settle grievances without enforcing individual workplace rights. The heavy emphasis on fact-finding and evidence-based procedures is an area that unionised firms could learn some ‘tip and tricks’ from non-union companies. This is not an argument for unionised organisations to become non- unionised. It is simply to highlight that the Mexican stand off that has emerged between these two types of enterprise-level employment systems is unhelpful as it is limiting the potential for cross-organisational learning.

4.6 ‘Mixed’ organisational HRM regimes and dispute resolution: the case of Allied Irish Bank

One argument sometimes used to counter the above line of thinking is that unionised and non-unionised environments are distinctive because each type of workplace regime installs employment practices that operate as integrated bundles which are difficult to unpack and thus not easy to transfer. This argument draws upon a prominent idea in the academic literature on the economics of organisation that emphasises the need for complementarity between structures, practices and procedures in organisations (Milgrom and Roberts, 1992). The idea is straightforward enough: organisations where a strong ‘fit’ exists between different practices are more likely to be efficient as organisational complementarities ensure that the collective impact of a bundle of HRM policies is greater than the sum of the individual parts. The thinking has also left a strong imprint on the employment relations literature, giving rise to the assumption that it is more advantageous to introduce work practices such as dispute resolution procedures in bundles. At the level of theory this argument appears plausible, but the survey evidence of workplace practices in Ireland and in other countries suggest that the situation on the ground is different. As suggested earlier in this chapter, almost all the studies on this matter in Ireland show that the majority of organisations do not have tightly integrated bundles of HRM policies. If there is a trend, it is towards firms adopting a pragmatic pick and mix approach to the adoption of employment practices. This suggests that many firms are not overly concerned with diffusing complementary bundles of HRM

policies and have internal employment systems that consist of a range of policies and practices drawn from a variety of contrasting employment relations traditions. To give a fuller insight into how such a situation can arise a case study of AIB is presented below.

Allied Irish Bank has a human resource management system that is neither fully union nor non-union in orientation. Instead, it consists of an amalgam of practices and procedures that are commonly associated with different models of HRM. Although about 40 per cent of its workforce are not in any union, the organisation still engages in collective bargaining with the Irish Bank Officials Association (IBOA) – one of a number of trade unions that operate in the Irish financial sector – to set terms and conditions for all employees. At the same time, it has a number of HRM policies that are commonly associated with non-union workplaces. For example, it has a non-union grievance procedure alongside a formal union grievance procedure. It also has a partnership arrangement established in collaboration with the IBOA, but which also covers non-union employees. This hybrid HRM system emerged unintentionally rather than by design.

In the seventies and eighties, employment relations in the Irish banking industry were highly adversarial. During this period a number of high profile and prolonged strikes occurred across the industry An industrial relations dispute in the early nineties brought matters to a head inside AIB. At this time, the strategic priorities of the management and unions were virtually irreconcilable. Management was eager to restructure and rationalise the organisation, a move that would involve significant job losses. The union, which was not part of ICTU, and thus under no obligation to stay within the pay award limits established by the prevailing national social partnership agreement, demanded a big wage increase for its AIB members. Senior management was in no mood to cede to this wage claim. Managers calculated that the circumstances were right to end the adversarial employment relations culture inside the organisation by ‘taking on’ the unions. The wage demand was rejected and, in response, the union initiated strike action. To signal the uncompromising stance that it was going to adopt, AIB management quickly announced that employees who got involved in strike action would be suspended. This considerably raised the stakes in the dispute for it effectively turned the dispute from being a wage claim into a conflict about the future

status of the trade union inside the organisation. If the union was to stand any chance of winning the dispute it now had to close the entire operation of the bank.

A major confrontation erupted with the union working hard to close bank offices and management equally determined to keep them open. In the end, about 40 per cent of the workforce crossed picket lines, a sufficient number to allow management to maintain a skeleton service. This weakened the strike action and triggered convulsions inside the union. Some of those who crossed the picket line decided to leave the union while the union took the decision to expel those members who had not complied with the strike call. Great acrimony opened up between union and non-union members, strengthening the position of management even further. The strike finally ended without the union obtaining its wage claim. However, the legacy of embittered relations between the management and union as well as between those employees who had gone on strike and those who had continued working was hardly a healthy environment to seek improved organisational performance.

Management may have ‘won’ the strike, but it now had to restore ‘normal’ relations inside the organisation. It essentially had to deal with two matters. One was to ensure that the sizable number of staff no longer in the union had a voice inside the organisation as well as access to proper comprehensive procedures that afforded them protection at the workplace against arbitrary decision-making. To this end, management established a staff consultative committee consisting of senior management and employees ‘elected by their peers’. Management would use this committee to inform non- unionised staff of corporate performance and proposed plans for the future. Members of the committee would have the opportunity to quiz management about possible changes to corporate or organisation strategies, to make representations about certain aspects of working conditions that were considered unsatisfactory or in need of change, and to exchange views on matters that were causing anxiety within the workplace.

In addition to establishing a staff forum, AIB also created what was, in effect, a non-union grievance arrangement procedure. Several independent staff advisers were established to help employees address complaints and grievances by providing employees with: information about AIB policy on particular employment matters;

assistance on how to present and advance a complaint; and general support and guidance. AIB also appointed an external ombudsman with wide experience in the resolution of disputes to assist in the settlement of disputes. However, the ombudsman was not given an explicit set of terms of reference. The arrangement was rather informal but essentially the remit was to act in an impartial way to help settle grievances and disputes inside the organisation. (Appendix 2 includes a more formal set of terms and conditions for the role of ombudsman used by an international bank.) More specifically, the ombudsman would investigate a particular grievance, report findings and when appropriate, make recommendations about how the dispute could be solved in an